As the world continues to work through how to handle the explosion of deepfake content online, it seems that not all AI-created videos are stirring controversy. Synthesia, a London startup building products around highly realistic AI avatar technology, says it’s a big hit with enterprises, with some 60,000 of them — 1 million users — tapping the tech to build avatar-based videos from text documents, for sales and marketing, for training and more.

Now VCs also want to get in on the action. Synthesia today confirmed that it has closed a funding round of $180 million, a Series D that catapults the company’s valuation to $2.1 billion. NEA is leading the round, with participation from new investors WiL (World Innovation Lab), Atlassian Ventures, and PSP Growth, plus previous backers GV and MMC Ventures. Synthesia has raised $330 million to date.

The startup plans to use the funding for hiring, particularly to expand in Asia Pacific – the bulk of Synthesia’s business today is in Europe and North America – and to continue evolving its products. 

“We’re doubling down on all the things we’re already doing right,” said CEO and co-founder Victor Riparbelli, in an interview. “We want to make our avatars better.” He said the company’s “long roadmap” includes more realistic motion; being able to port avatars into different environments; avatars that can interact with objects to, for example, provide physical demonstrations; and avatars that can interact with users. It’s also going to be eating some of its own dogfood by building more “agents” to help customers create avatar-based content more easily. 

One area where it’s not chasing activity is in M&A. Synthesia to date has made no acquisitions and Riparbelli said its preference is for building its technology in house, alongside using APIs for what it does not build itself. For example, it works with Eleven Labs for voice, and it taps and fine-tunes a variety of third-party Large Language Models instead of building its own.

Synthesia’s round has been in the works for at least a few months: The Information reported that it was raising $150 million in November 2024. For a little more fundraising context, it’s been about 18 months since Synthesia last disclosed funding: in June 2023, it closed a $90 million round on a $1 billion valuation with previous backers including Kleiner Perkins and Accel. 

In the interim, AI companies have been a huge magnet for VCs, providing a bright spot in a somewhat lackluster funding landscape. AI startups accounted for more than 37% of the $368.5 billion invested across all startups in 2024 globally, according to PitchBook data. In the U.S. the proportion was even more stark, with AI startups garnering nearly 50% of the $209 billion invested last year. 

And yes, issues abound the field of AI. The power consumption required to train and run AI models, major copyright issues around how models are trained, AI getting weaponized as in the case of deepfakes or malicious hacking, AI replacing humans and their work, and AI getting it wrong — all huge problems that have yet to be resolved meaningfully. But there are also some significant advocates who will push the AI industry into even loftier, hyped-up heights. Synthesia was one of the companies name-checked by the U.K. government this week when it launched its big AI action plan, with an intention to dole out billions in deals to AI companies to rebuild public services and the economy.

Synthesia says it now has 60,000 businesses as customers, compared to 50,000 in June 2023, and its aim has been to carve out its own niche in the space as the go-to platform for enterprises that are looking to build out their video interactions. 

It’s doing so at a time when advanced AI video functionality is getting increasingly more common. There are startups that are working on the ability to extrapolate full product videos out of basic documents, while others aim to build avatars capable of real-time interactions and real-time video assistants. Some claim to be able to create lifelike avatars of their users from just one minute of video. (A simple test to see just how crowded the market is here is to put Synthesia into Google, and check out how many companies are buying search ads against its name. There are a lot.)

Synthesia is not immune to the product race. It’s been building a “2.0” version of its platform for a while now and has already released a number of related features, including its own take on personal avatars that users can make with a laptop camera or phone that feature emotions; a Chrome extension that builds basic videos based on screen data; its own version of an AI video assistant that can convert documents into videos; multi language options; and collaboration features for people to edit a video simultaneously.

More to the point, though, Riparbelli believes that the company has an edge by focusing itself squarely on business users, and its investors say that is what makes the startup attractive.

“Synthesia is one of only a handful of AI companies that can take real cutting edge AI and actually translate those into something with real utility,” said Vidu Shanmugarajah, a partner at Google Ventures in London, in an interview. “It has extreme customer focus. They are obsessed with driving value in a practical setting. Putting that together in a platform that’s safe and compliant is super hard to do.”

It’s interesting, too, to see Atlassian investing in this round.The company has been injecting AI functionality into its various apps, and it seems only a matter of time that a platform like Jira might start adding in more video tools into that mix, opening the door for a collaboration with its portfolio company.